Finding 621038 (2022-001)

Significant Deficiency
Requirement
N
Questioned Costs
-
Year
2022
Accepted
2023-05-30

AI Summary

  • Core Issue: The Foundation failed to calculate and fund the Replacement and Extension Account as required by the USDA loan agreement.
  • Impacted Requirements: Internal controls over compliance were ineffective, leading to underfunding of approximately $143,000.
  • Recommended Follow-Up: Implement controls to ensure accurate calculations and full funding of the account before the end of each fiscal year.

Finding Text

2022 ? 001 Federal agency: U.S. Department of Agriculture Federal program title: Communities Facilities Loans & Grants Assistance Listing Number: 10.766 Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: September 1, 2021 through August 31, 2022 Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Compliance Requirement: Special Provisions Criteria or specific requirement: The Foundation has certain reserves with minimum funding requirements related to their USDA loan. Condition: The Foundation's internal controls over compliance were not effective. The calculation for the Replacement and Extension Account was not done so they were not able to determine if the account was properly funded. Questioned costs: None Context: During the audit, it was discovered that the Foundation was not calculating the required funding level for the Replacement and Extension Account nor funding the reserves in accordance with the Security Agreement. The reserve accounts were underfunded by approximately $143,000 for the year ended August 31, 2022. Cause: Management oversight. Effect: The Foundation could be out of compliance with the covenants of the Loan and Security Agreement. Repeat finding: N/A Recommendation: We recommend the Foundation design controls to ensure that calculation is completed in accordance with the loan agreement and funded in full prior to the end of each fiscal year. Views of responsible officials: There is no disagreement with the audit finding. A waiver of the funding requirement was obtained for the year ended August 31, 2022. Management will incorporate the funding calculation for the Replacement and Extension Account into the reconciliations to be performed and reevaluated monthly.

Categories

Internal Control / Segregation of Duties Significant Deficiency Matching / Level of Effort / Earmarking Special Tests & Provisions

Other Findings in this Audit

  • 44596 2022-001
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
10.766 Community Facilities Loans and Grants $6.23M
93.498 Provider Relief Fund $143,882